Should I Get a Trust? – Minnesota Estate Planning

If you are beginning the estate planning process, you may be wondering whether you should have a trust in place. A trust can often achieve much more than a last will and testament. There are various types of trusts that can be used to accomplish your objectives — including revocable and irrevocable trusts in Minnesota. Whether your goals are to protect your assets from creditors, avoid probate, reduce your tax burden, or ensure you provide for your family, an estate planning attorney can assist you with satisfying your wishes.

What is a Trust?

A trust is an estate planning tool that allows you to ensure your assets are managed in the way you wish during your lifetime and after your passing. It allows an individual (referred to as the grantor or creator) to give another person (the trustee) the authority to manage the assets in the trust for the benefit of a third party (the beneficiary).

When considering whether you should get a trust, it’s essential to be aware that these vehicles can offer many different types of benefits that are not available by drafting a will. Like a will, trusts can be used to provide for your loved ones. But they can also be used to strategize how, when, and to whom your wealth will be distributed.

Types of Trusts in Minnesota

Trusts can either be revocable or irrevocable. An irrevocable trust in Minnesota generally cannot be changed or revoked by the creator. Some of the biggest advantages they provide include asset protection and tax benefits. This is in contrast with a revocable trust, which allows you to modify the trust at any time — while receiving the benefits of the trust while you are alive.

Common types of trusts in Minnesota include the following:

• Testamentary trusts — A testamentary trust is created by the instructions in a last will and testament to distribute your estate after your passing.
• Living trust — A living trust allows you to manage the assets in the trust during your lifetime and distribute them to your chosen beneficiaries upon your death.
• Charitable trusts — A charitable trust is an estate planning vehicle that allows you to donate assets to a charitable organization.
• Special needs trusts — A special needs trust is a planning tool that can be used to provide for a loved one who has a disability, while still preserving their eligibility for government benefits.
• Spendthrift trusts — A spendthrift trust is a type of trust that is designed to restrict the beneficiary’s access to the trust’s assets by releasing them incrementally, rather than all at once.
• Medicaid trusts — A Medicaid trust is a tool that allows you to preserve their assets while planning for Medicaid eligibility.
• Pet trusts — A pet trust can be set up to ensure for the care of a companion animal after the grantor’s passing.

Importantly, simply drafting a trust instrument isn’t enough. Regardless of the type of trust you decide to create, it will need to be funded. Failure to fund a trust can mean the instructions in the trust will not be followed — and your objectives will not be met. A trust can be funded with a broad scope of assets, including bank accounts, securities, real estate, personal property, business interests, life insurance, and more.

Benefits of a Trust

Whether you set up a revocable or irrevocable trust in Minnesota, a trust can provide a number of benefits. Notably, you might want to use a trust not only to distribute your assets when you pass away — but also to plan for incapacity. A trust can allow you to designate another individual to manage your assets in the event you become unable to do so yourself, avoiding the need for a conservatorship. Depending upon your goals for the trust, you can also customize it to accomplish the following:

• Avoid the lengthy and public probate process
• Help your loved ones avoid estate tax consequences
• Provide instructions regarding how your assets will be distributed when you pass away
• Control how your wealth is distributed
• Keep your financial matters private and out of the public record when you pass away
• Avoid multi-jurisdictional issues during the probate process if you have property in multiple states
• Safeguard your family from lawsuits and creditors

Not all trusts in Minnesota have the same advantages. For instance, a revocable trust does not offer tax advantages or protect assets from creditors. Trusts could also have unintended tax consequences. It’s crucial to work with an estate planning attorney who can help you create a trust that meets your needs.

Learn More About How a Minnesota Estate Planning Attorney Can Help

Creating a trust can be complex and it’s critical to have the legal guidance you need to help ensure your wishes are carried out. At Mundahl Law, our estate planning attorneys assist our clients with creating comprehensive estate plans and setting up trusts that will meet their financial goals. Located in Maple Grove, Mundahl Law works with clients throughout Minnesota for estate planning matters.

To learn more about how we can assist you, or to schedule an appointment, contact Mundahl Law at 763-575-7930, or click schedule a consultation to speak with our Client Advocate.